How to read and understand your credit report
A credit report is often treated as a mysterious judgement handed down about your character. It is nothing of the sort. It is a record of accounts, balances, and payment history, assembled from what lenders report. Reading it carefully is one of the highest-value hours you can spend before any borrowing decision.
Personal information
The first section lists your name, dates of birth, and addresses. It looks trivial, and it is the section where errors most often begin. An old address that will not clear, or a name spelled two ways, can cause accounts to be matched incorrectly or not matched at all.
Read it slowly and correct anything inaccurate, even if it seems harmless.
Accounts and payment history
This is the substance of the report: every credit account, when it opened, the limit or original balance, the current balance, and a month-by-month record of whether payments arrived on time.
Payment history carries more weight than almost anything else. A long, unbroken run of on-time payments is the single strongest thing a report can show, and it can only be built with time.
Balances and utilisation
The proportion of your available revolving credit that you are using matters as well as the absolute amount. Carrying a balance close to the limit month after month reads differently from the same balance against a much larger limit.
This figure moves quickly, which means it is one of the few parts of a report you can improve within a single billing cycle.
Searches and linked records
Reports distinguish between searches you can see and searches lenders can see. Checking your own report does not affect anything. A cluster of formal applications in a short window can, because it reads as urgency.
Financial associations — joint accounts and shared borrowing — link your record with someone else's. If a relationship has ended and the accounts are closed, ask for the link to be removed.
Disputing an error
If something is wrong, raise it in writing with the agency and, where relevant, with the lender that reported it. Be specific about the entry and what the correct information is, and keep copies of everything.
Corrections take time to work through, which is exactly why this is a task for months before an application rather than the week of one.
Go750 publishes educational information about money and housing. This article is not financial advice and Go750 does not offer or arrange financing.
